Business Accounting MCQs

Business Accounting MCQs

Answer these 100+ Business Accounting MCQs and assess your grip on the subject of Business Accounting.
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1: Under the _____, partnership assets are arranged in a certain order to pay any outstanding debts.

A.   Non-negotiable/notices

B.   Negotiable/defects

C.   Marshaling/debts

D.   Partnering/claims

2: When a business records accrued interest expense on a note payable ________.

A.   Interest Expense is credited

B.   Note Payable is credited

C.   Cash is debited

D.   Interest Payable is credited

3: Because ________ are less liquid for the depositor than ________, they earn higher interest rates.

A.   Money market deposit accounts; time deposits

B.   Checkable deposits; savings accounts

C.   Savings accounts; checkable deposits

D.   Savings accounts; time deposits

4: Bank capital is equal to ________ minus ________.

A.   Total assets; total liabilities.

B.   Total liabilities; total assets.

C.   Total assets; total reserves.

D.   Total liabilities; total borrowings

5: The contribution margin income statement presents ________ below the contribution margin line.

A.   All fixed expenses

B.   Only variable expenses relating to selling and administrative activities

C.   Only fixed expenses relating to selling and admin fees

D.   All variable expenses

6: When a division is operating at capacity, the transfer price should be ________.

A.   A​ market-based transfer price

B.   A​ cost-based transfer price

C.   Based on opportunity cost

D.   The total manufacturing cost

7: With _____, marketers group people by their values, attitudes, personality, and lifestyle.

A.   Demographics

B.   Psychographics

C.   Geodemographics

D.   None of these

8: Set up time is disregarded as an improvement priority under the ____ manufacturing concept.

A.   Ust in Time

B.   Traditional

C.   Both of above

D.   None of these

9: By increasing ________, a manager can increase operating income under absorption costing.

A.   Leased assets

B.   Fixed costs

C.   Variable costs

10: Calculating gross pay for hourly workers is an example of ________ decision making.

A.   Structured

B.   Unstructured

C.   Undocumented

D.   Semi-structured

E.   Procedural

11: Changes in activity have a(n) _________ effect on fixed costs per unit

A.   Inverse

B.   Neutral

C.   Positive

D.   Negative

12: When a company uses the allowance method to measure bad debts, ________.

A.   The Allowance for Bad Debts account balance is added to the balance of the Accounts Receivable account to arrive at the net realizable value

B.   The amount of bad debts expense is estimated at the end of the accounting period

C.   The Allowance for Bad Debts account is debited when the bad debts expense is estimated

D.   The Bad Debts Expense account is debited when an account is written off

13: When discussing weighing schemes for calculating the weighted average cost of capital, ________.

A.   Market value weights are preferred over book value weights and target weights are preferred over historic weights.

B.   Book value weights are preferred over market value weights and target weights are preferred over historic weights.

C.   Book value weights are preferred over market value weights and historic weights are preferred over target weights.

D.   Market value weights are preferred over book value weights and historic weights are preferred over target weights

14: When the sales price per unit decreases, the contribution margin per unit ________.

A.   Increases proportionately

B.   Increases

C.   Remains the same


15: When the total fixed costs increases, the contribution margin per unit ________.

A.   Increases

B.   Decreases

C.   Increases proportionately

D.   Remains the same

16: The income statement of a service company will most likely include ________.

A.   Salaries expense

B.   Factory overhead

C.   Direct materials

D.   Cost of goods sold

17: When a company pays cash for a long-term investment in bonds, ________.

A.   Equity remains unchanged

B.   Current assets increase

C.   Liabilities increase

D.   Total assets increase

A.   Human resources

B.   Research and development

C.   Firm infrastructure

19: __________ is the total combined values of all of the company’s customers.

A.   Customer satisfaction

B.   Customer-perceived value

C.   Share of customer

D.   Customer relationship management

E.   Customer equity

20: A shortened form of the ledger is called a ________.

A.   Trial balance

B.   Balance sheet

C.   Chart of accounts

D.   T-account

21: An entity that buys goods and sells them to customers at a markup is a ________.

A.   Merchandiser

B.   Service provider

C.   Manufacturer

D.   Producer

22: An unfavorable flexible budget variance in operating income might be due to a(n) ________.

A.   Decrease in sales volume

B.   Increase in sales price per unit

C.   Increase in variable cost per unit

D.   Decrease in fixed costs

23: At the maturity of a note payable, a borrower will pay ________.

A.   The principal plus interest

B.   The principal minus interest

C.   The interest amount only

D.   The principal amount only

24: Discounted cash flow methods, such as net present value and internal rate of return, ________.

A.   Focus on the payback period

B.   Use net income amounts rather than cash flows

C.   Consider discounted cash flows

D.   Use simple interest calculations

25: Dividends normally carry a _______ balance and are shown in the ______________.

A.   Debit; Statement of stockholders’ equity.

B.   Debit; Income statement.

C.   Credit; Balance sheet.

D.   Debit; Balance Sheet

26: In multiple regression, plot the residuals against ____ to detect changing variability

A.   All explanatory variables

B.   Collinear variables

C.   The predicted values

D.   The response variable

27: Inventory reduction is a ____ principle.

A.   Lean

B.   Traditional processing

C.   Economic

D.   Just-in-time

E.   Wait time

28: Payment cards with disposable numbers are known as _____.

A.   Credit cards

B.   Store-branded cards

C.   Single-use cards

D.   Charge cards

29: The commitment concept says that plans should ________.

A.   Extend far enough to meet those commitments made when the plans were developed

B.   Be done for as long a time period as possible

C.   Be done for as short a time period as possible

D.   Not commit to specifically meeting the goals made when the plans were developed

30: The current portion of long-term notes payable is ________.

A.   The amount of principal that will be paid within five years

B.   Included with the long-term liabilities on the balance sheet

C.   Recorded an adjusting entry

D.   Reclassified as current for reporting purposes on the balance sheet

31: The direct materials budget is prepared using information from the ________ budget.

A.   Cash

B.   Master

C.   Capital expenditure

D.   Production

32: The ima?s ethical standards include all of the following except ________.

A.   Honesty,

B.   Credibility,

C.   Confidence,

D.   Competence

33: The predetermined overhead allocation rate is calculated by dividing ________.

A.   The actual overhead costs by actual amount of the cost driver or allocation base

B.   The total estimated overhead costs by total number of days in a year

C.   The estimated amount of cost driver by actual total overhead costs

D.   The estimated overhead costs by total estimated quantity of the overhead allocation base

34: When preparing the cost of goods sold budget, ________.

A.   Ignore balances in Finished Goods Inventory

B.   Start by calculating the projected cost to produce each unit

C.   Ignore the inventory costing method

D.   Multiply units produced by the total projected cost per unit

35: _____ are people who are prompted to apply for a job by someone within the organization.

A.   Direct applicants

B.   Internal employees

C.   Boomerang employees

D.   Referrals

E.   Virtual employees

36: The amount of net income is transferred from ________ to ________.

A.   The balance sheet; the income statement

B.   The income statement; the statement of owner's equity

C.   The balance sheet; the statement of cash flows

D.   The income statement; the statement of expenditures

37: ____ manufacturing philosophy emphasizes quality and zero defects.

A.   Lean

B.   Traditional

C.   Chinese

D.   Zero-Based

38: All fixed costs are listed ________ on a contribution margin income statement.

A.   Above the gross profit line

B.   Below the gross profit line

C.   Above the contribution margin line

D.   Below the contribution margin line

39: Given a price of p2, this firm in a purely competitive industry should ___________

A.   Produce Q1

B.   Produce Q3 with a minimum loss

C.   Produce Q5 with an economic profit

D.   Shut down to minimize the loss at the fixed cost level

40: The ________ capital budgeting method uses accrual accounting income.

A.   ARR

B.   Payback

C.   NPV

D.   IRR

41: Under variable costing, a unit of a product includes ________.

A.   Direct material, direct labor, and manufacturing overhead

B.   Direct material, direct labor, and variable overhead cost

C.   Direct material, direct labor, and fixed manufacturing overhead

D.   Direct material, direct labor, and all variable manufacturing overhead

42: Reduction in production cost results in ________.

A.   Decreased profitability

B.   Lower shareholder value

C.   Increased profitability

D.   Increased competition

43: The entry to record the purchase of direct materials on account would include a ________.

A.   Debit to the Raw Materials Inventory account.

B.   Debit to the Work-in-Process Inventory account.

C.   Credit to the Work-in-Process Inventory account.

D.   Credit to the Raw Materials Inventory account

44: The interest rate that investors demand to earn for loaning their money is known as the ________.

A.   Yield to maturity

B.   Coupon rate

C.   Differential rate

D.   Market interest rate

45: Total revenue divided by ________ = units sold.

A.   Cost

B.   Profit

C.   Selling price

D.   Total operating costs

46: Underallocated overhead occurs when ________.

A.   Actual overhead costs are less than allocated overhead costs

B.   Estimated overhead costs are greater than budgeted overhead costs

C.   Estimated overhead costs are greater than actual overhead costs

D.   Allocated overhead costs are less than actual overhead costs

47: A cost center responsibility report ________.

A.   Typically focuses on the flexible budget variance

B.   Includes depreciation expense

C.   Is the same as a performance report

D.   Shows all costs incurred by the department

48: In a negative message regarding a transaction, the salutation should be _____.

A.   Addressed To Whom It May Concern

B.   Dear Sir or Madam

C.   Personalized to the recipient

D.   Dear Customer

49: When 1,000 shares of $3 stated value common stock is issued at $18 per share, ________.

A.   Common Stock - $3 Stated is credited for $18,000

B.   The difference between the issue price and the stated value is credited to Paid-In Capital in Excess of Stated

C.   The accounting is exactly the same as the accounting for par value stock

D.   The account titled Paid-In Capital in Excess of Stated is used to record the issue price of the stock

50: All of the following are assets except ________.

A.   Inventory

B.   Patents

C.   Cash

D.   Bank loans